Election nerves hits the building sector

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A loss of momentum in the construction sector has been blamed on election jitters as building firms delay spending decisions ahead of the May poll.

The headline reading from the closely watched CIPS/Markit purchasing managers’ index survey fell to 57.8 in March – where a figure of 50 separates growth from contraction.

The figure is down from 60.1 in February and the lowest in three months following a slowdown in the three sub-sectors covering housebuilding, commercial construction and civil engineer- ing.

Markit economist Tim Moore said the sector was still growing at a strong pace but had lost some of the swagger seen last year.

He added: “All three main categories of construction activity saw a growth slowdown in March, in part reflecting softer new business gains as some clients delayed spending decisions ahead of the General Election.”

However, he pointed out that UK construction companies were still “highly upbeat” about prospects in the next 12 months due to improving economic conditions, strong order books and a wide range of tender opportuni- ties.

Housing was the best performing sub-sector followed by commercial construction. Civil engineering output growth eased markedly on the previous month and was the weakest performing category of activity.

The latest survey highlighted signs of caution among construction companies in terms of additional job hiring, with overall employment numbers rising at the least marked pace since December 2013.

Cost pressures persisted last month as anecdotal evidence pointed to stock shortages at suppliers and robust demand for construction materials.

The availability of sub-contractors fell sharply again, pushing up their charges by the steepest amount since the survey began in April 1997, and there were shortages of material supplies which also pushed up costs, Markit said.

Looking ahead, construction firms said they were they were more confident about the coming 12 months than at any time since February 2006.